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Ether.fi Explained: Empowering Stakers

Ether.fi is a big deal in the world of restacking protocols for keeping crypto assets safe. Unlike others, it only deals with Ethereum (ETH) instead of other tokens. Its main deal revolves around a token called eETH, which you receive when you deposit ETH.

Here’s how it works: you give them some ETH, and they give you eETH in return. You can then use this eETH in the DeFi world to make more money. The cool part is, while your ETH is with them, you get rewards from Ethereum’s proof-of-stake (PoS) system and later from EigenLayer’s rewards.

You can also earn points that count in how decisions get made in the system. And that’s not all—Ether.fi is also getting into staking by creating something called an actively validated service (AVS).

Illustration showing the decentralized staking process of Ether.fi with nodes and users.
Source: Coinbackyard

How Does Ether.fi Operate?

Ether.fi operates as a decentralized staking system, meaning it isn’t controlled by any single authority. It’s all about letting users control their own keys to keep their assets safe and have freedom.

  1. Staking Process: People put in chunks of 32 ETH into Ether.fi’s system. This starts a bidding process where different operators try to win the right to be the validator.
  2. NFT Representation: Once someone wins the bid, they become the validator. The system then makes two special NFTs that show who owns the rights to withdraw the ETH: T-NFT and B-NFT.
  3. Withdrawal Rights: T-NFTs can be traded and represent the right to withdraw 30 ETH, while B-NFTs are tied to the user’s account and represent the right to withdraw 2 ETH. B-NFT acts as insurance against any penalties, making sure users’ assets stay safe.
  4. Validator Setup: Using special technology, users handle their withdrawal keys and share validator keys with operators. This keeps everything secure and running smoothly.
  5. Node Service Market: Ether.fi has a marketplace where users can find node operators. They’ve teamed up with Obol Labs to support independent operators, making the Ethereum system more decentralized.
  6. NFT Project: Ether.fi also runs Ether.fan, where users stake ETH to make NFTs for points. This boosts rewards based on how long they stake. All the staked ETH goes to independent node operators who use special tech to validate transactions.

Economic Model and Token Distribution

Ether.fi’s system is all about making sure there’s enough money coming in to keep things running smoothly. Here’s how it works:

  • Staking Rewards: When rewards come in, 90% go to the people who staked their coins. The remaining 10% is divided between the individuals operating the nodes and the system itself.
  • Auction Fee: During auctions, node operators pay a small fee. This money gets shared out between stakers, node operators, and the system.
  • Mint/Burn Fee: When people make or destroy eETH, there’s a fee. The system divides this fee between stakers and node operators.
  • Service Fee and Infrastructure Costs: Any fees for using Ether.fi’s services get shared between stakers, node operators, and the system itself.

ETHFI Governance Token

ETHFI is the big boss in the Ether.fi world. There are 1 billion of these tokens, and right now, 115.2 million of them are out there. We give them out to investors, partners, important individuals who work on the project, and the system’s stash of tokens. This ensures that everyone has a fair say in how things are run.

Ether.fi is a major player in the world of restaking. It lets users control their assets while getting involved in staking. With its new ideas and strong money plan, Ether.fi is making way for a future where Ethereum is more open to everyone.

April 19, 2024 at 5:00 pm

Updated April 19, 2024 at 5:00 pm


Remember, investing in cryptocurrencies involves risks, and it’s important to conduct thorough research and seek professional advice before making any financial decisions. (Please keep in mind that this post is solely for informative purposes and should not be construed as financial or investment advice.)


Ether.fi is a restaking protocol specializing in Ethereum (ETH) assets. It provides users with eETH tokens in exchange for deposited ETH, allowing participation in DeFi activities while earning rewards from Ethereum's proof-of-stake system.

Ether.fi operates as a decentralized staking system, where users control their own keys to ensure asset security and freedom. The process involves staking ETH, bidding for validator rights, receiving NFT representations for withdrawal rights, and engaging with node operators through a marketplace.

ETHFI is the governance token of Ether.fi, providing holders with voting rights and influence over the platform's decisions. With 1 billion tokens in existence, ETHFI plays a crucial role in governing Ether.fi's ecosystem.

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